The Hierarchical Funding Model of Capital Structure Indicates That Firms

question 86

True/False

The hierarchical funding model of capital structure indicates that firms prefer to finance investment opportunities with least expensive forms of financing first and the most expensive last.

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Definitions:

Risk Averse

A tendency to avoid risks or to minimize potential losses.

Experienced Managers

Professionals who have gained knowledge and skills in leading and making decisions through years of overseeing organizational operations.

Successful Managers

Successful managers are individuals who effectively lead, direct, and supervise a team or organization towards achieving set goals and objectives through strategic planning, decision-making, and motivating employees.

Intuition

An instinctive knowing or sensing without the use of rational processes, often playing a significant role in decision-making.